Working Paper

Sarah Yueting TongHong Kong Institute of Economics and Business Strategy

Abstract:Ethnic networks are important for cross-border economic activities. Ethnic Chinese are well known for their active participation in international trade, particularly in Southeast Asia. Our empirical study of Vietnam private firms show that Chinese businesses have played important role in Vietnam's export growth after economic reform started in the country more than a decade ago. In addition, we find that, private firms with strong ties with state owned enterprises are in a better position in going abroad. This is because the reform in Vietnam has not substantially weakened the dominance of the state sector in the economy. Finally, our analysis identifies some elements that demonstrate higher initial cost for export. This suggests that there is substantial entry cost in export market. The firm's export behaviors are consistent with the assumption of entry barrier to export.